Richmond Research Institute (RRI) Is a Private Research Organization Specializing

Essay

Richmond Research Institute (RRI) is a private research organization specializing in medical research. It specializes in performing research about the awareness of the general public with respect to common ailments Colds, flu, etc.). Various health organizations contract with RRI to conduct research on their behalf. It carries out this research through phone surveys. The results of such research are then provided to health organizations that use the information to develop pamphlets about these common ailments.
In order to better understand its costs, RRI has decided to implement an activity-based information system. It collected the following data for the month of January:
● 60 tele-researchers (labor) to complete 24,000 surveys and 115,000 calls, $110,000. Each survey takes
9 minutes to complete and each call takes 4 minutes.
● Long-distance phone charges for the surveys, $22,000.
● Preparation of scripts for surveys (2), $7,000, and sales pitches (4), $5,000
● Training of tele-research labor by the training department of RRI to conduct surveys for specific customers, $14,200
● Automated dialing equipment, $23,000
● Occupancy costs, $20,000
● Three supervisors, $30,000
● Human resources, $11,000
(a) Prepare an activity matrix as follows: In column 1, list all the activities according to their level of usage (i.e., unit-level, batch-level, etc.). In column 2, list the cost driver base for each activity listed in the previous column. In the remaining columns (3 through 10), fill in the appropriate numbers
Note that columns 3 through 10 are to be labeled as follows: unit-level resources, batch resources, product resources, customer resources, facility resources, total resources supplied, total driver base level and cost driver rate
(b) Does the cost driver rate for unit-level resources have the same meaning as the cost driver rate for a facility level resource? Explain
(c) Compute the unit-level and full-ABC costs per unit for the surveys and sales calls